With the auto industry witnessing a severe crisis, Micro, Small and Medium Enterprises (MSMEs) are now feeling the heat with demand for auto equipment that they provide to tier 1 components manufactures plunging to record low.
Consequently, MSMEs working in the automobile sector in the NCR, have already reduced their working hours, stopped recruitment and are planning to go for job cuts.
“The current slowdown in the sector has adversely affected MSMEs. It is a two-fold blow on us as our lending pipeline has been choked, and there is also low demand from tier-1 original equipments manufacturers,” Sandeep Kishore Jain, MD, Solo Manufacturing Private Ltd based in Gurgaon told this publication.
“We witnessed about 35 per cent decline in sales of components in Q1 FY19,” he said. While earlier, workers were doing overtime to fulfill demand, there is much less work now, Jain added. Solo is a supplier for precision machined castings, CNC machined parts, nodular cast iron, steel forgings etc.
On being asked about a revival in the upcoming festive season, he said “I don’t think the sector will revive as no step has been taken yet in this direction. This slowdown will stay for some time.”
Small manufacturers have also been forced to go in for job cuts. “Nu Tech Enterprises is looking for manpower restructuring, which will result in job losses by 20-25 per cent. There is low demand for components, so there is less work,” said Adarsh Kapoor, CEO, Nu Tech Enterprises, Faridabad, which manufactures metal rods, industrial shafts, valve guides, metal bushes etc.
Kapoor added his firm has witnessed a sales decline of 25-30 per cent in the last two quarters. According to ACMA, the growth in total turnover of the auto component manufacturing firms slowed down by 14.5 per cent to `3,95,902 crore in FY19.